The Nordstrom Case Study: What to Expect When Dropping the Trump Brand

GUEST POST BY:

Lamar Pierce–Associate Professor of Organization and Strategy, Washington University in St. LouisAaron Chatterji– Associate Professor, Duke University

Ivanka Trump’s brand reported an over 300% sales increase in the month of February. Does this mean Nordstrom’s decision to drop it is costing them sales? Not likely, indicates new analysis using data from CivicScience. Even the ire of a President may not cost a company much if it only influences customers that would never shop there anyway.

The January brouhaha between President Donald Trump and Nordstrom represents the “new normal” for American business. Companies are increasingly being drawn in to political debates, either proactively via CEO activism from their own top management or involuntarily, as when Boeing and Lockheed recently got caught in the new President’s crosshairs. Historic rates of political polarization, supercharged by social media, are seeping into consumer attitudes. Consumers are looking to know where companies stand on the issues, and companies ought to be adding data surrounding political attitudes to their existing customer profiles.

Think about it like this. Nordstrom cares a lot about moving potential consumers from “indifferent” to “passionate”. Target, on the other hand, wants to make sure “indifferent” consumers, who still shop at their stores for staples, do not turn to “hostile”. That is a big difference that impacts how they respond when business and politics mix.

Data from CivicScience provides an interesting window into how this dynamic unfolds from Nordstrom’s perspective. Let’s look at Democrats and Republicans responded to the Trump controversy separately first.

It appears that there was a shift in Democrats who “like” Nordstrom after their run-in with President Trump. Importantly, this increase seems driven from people who previously had no opinion.

Now look at Republican attitudes towards Nordstrom:

As expected, a lot more Republicans now hate the venerable retailer. But how many would have really shopped there anyway? It looks like a sizeable portion of the movement came from consumers who had no opinion (i.e. not going to Nordstrom anyway).

Thus, even though Nordstrom took a social media beating, the shift in customers that matter most (those who now like them) could actually be a net positive for the company.

This chart includes both Republicans and Democrats. While we see that there appears to be an uptick in hatred for Nordstrom, most of it came from women who were indifferent before the controversy. These women probably were not shopping at Nordstrom before and were not going to be persuadable anyway. In fact, Ivanka Trump’s recent statement that she was ending her high-end jewelry line to focus on low-priced products confirms exactly what the CivicScience data are saying. Trump’s customer base is shifting down-market, precisely away from Nordstrom’s core demographics.

It is data like these that might tell us why Nordstrom stood behind its decision to drop the Trump brand. And it is just one more reminder that the impact of political controversies on brands really occurs at the “micro” level. The risks and rewards of being politically active are different depending on who your customers are and what their political views are.

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CivicScience provides strategic insight services to decision-makers at the largest brands, media companies, and investment firms in the world while giving consumers a trusted, convenient way to effect change.